The author is a Forbes contributor. The opinions expressed are those of the writer.

Loading ...

Loading ...

This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe

GameStop President Tony Bartel was one of the 48,200 attendees who made the annual pilgrimage to E3 2013 in Los Angeles this week to see the best games of this fall and early next year. The exec was at all of the major press conferences and spent time meeting with top game publishers, manufacturers and analysts.

The focus of E3 was on Sony and Microsoft and their next gen consoles, PlayStation 4 and Xbox One. The opening day press conferences set the tone for a new battle for the living room. I was able to catch up with Bartel to get his thoughts on some key E3 issues, including used games.

Often times at E3 press conferences, it’s obvious when employees in the audience are giving moderate applause for announcements. Microsoft had plenty of those during both the Xbox One reveal and its E3 press conference. But Sony had a very real reaction when it announced that PS4 would play used games and gamers would retain ownership of the games they buy with no strings attached.

“That was certainly an impressive moment,” said Bartel. “The deafening roar that arose from the crowd spoke volumes about the type of functionality gamers find important in next generation consoles. Our PowerUp Rewards surveys suggest gamers’ interest in next generation systems will be negatively impacted if they are limited to digital games or unable to play traded or pre-owned games. Ultimately, the end decision lies with the consumer and GameStop will be there to help them along the way.”

Used games playback and digital rights management issues have been making headlines since the Xbox Reveal all the way through this week at the show. Microsoft, after sending mixed messages, has said it will leave it up to publishers whether used games can be played in Xbox One. I asked Bartel what the game industry has learned from consumer reactions to the very different Microsoft and Sony next gen plans.

“We have good relationships with the publishers and they understand the importance of the $1 billion in trade-in credits GameStop provides to the overall industry,” said Bartel. “That’s a billion dollars each year we give to consumers who trade with us, who then spend that on new games. Seventeen percent of all new game purchases done at GameStop involve credit from trading in games. In fact, many publishers work with GameStop around credit-given promotions for top games in order to maximize software sales. This then allows for more used games to be sold to customers that are new to gaming. It’s an ecosystem that works, and one that benefits everyone. And the beautiful thing about moving into a new console cycle is the return of innovation with new software IP attracting more gamers to the industry.”

Another key differentiator for many consumers will be the $100 price difference between PS4 and the so-called Xbone.

“Both price points are in line with expectations for next-gen consoles, and can be subsidized with trades, allowing gamers to trade in older hardware for credit which can help drive sales of the new consoles,” said Bartel. “And with our PowerUp Rewards community having an installed base of 24 million consoles, which we estimate represents billions in currency available for trades for the new consoles, each of our console partners will be able to see the benefit of that in the coming months and years.”

Colin Sebastian, video game analyst for Baird, wrote, “Clearly Sony is emerging from E3 on stronger footing, contrasting the PS4 against the more pricey Xbox One. We note the PS4 is currently outselling the Xbox One on Amazon.com and GameStop. However, competition is intense, and with the PS4 positioned as more of a pure gaming platform than the Xbox One, Sony needs to engage gamers proactively in order to maintain this edge.”

I heard from a reliable industry source that PS4 is outselling Xbox One by a ratio of two to one coming out of E3.

“Demand for the new consoles is high and we have the dominant share in 13 out of 15 countries that we operate in – add in the fact that we now have more than 30 million PowerUp Reward members worldwide, so you can easily see how GameStop will lead the way in meeting that demand,” said Bartel, who would not confirm pre-order sales for the next gen consoles.

Wedbush Securities analyst Michael Pachter wrote that retailer GameStop had a positive E3 from excitement surrounding the launches of the two new next gen consoles in spite of no price cuts yet for the current gen consoles. He said the retailer also benefitted from a compelling price point for PS4 and no new restrictions on used gaming for Sony’s device. A strong slate of games should jumpstart GameStop comps through 2014.

Pachter and other analysts believe price drops are coming for current gen systems Xbox 360, PlayStation 3 and Wii, so I asked Bartel about when that might happen.

“Historically, we have seen price drops or bundles offered in the existing generation consoles just before the launch of the next-generation consoles,” said Bartel. “The Xbox 360 and PlayStation3 are excellent systems in their own right, and there are a lot of great titles that are en route for them into next year, and I see that continuing for some time after.”

Now that the dust has settled, gamers have time between now and November to make their decisions on which console to align with. E3 features a strong line-up of current gen games, many of which, like the just-released Naughty Dog The Last of Us and the upcoming Quantic Dreams Beyond: Two Souls, really push the visual fidelity and interactive storytelling capabilities of the PS3, in particular. With games like this coming out, there’s not necessarily a rush to make the jump to next gen this Christmas.